OVERVIEW
A Relaxed Day On Wall Street

Thursday’s session was notable for several reasons. The Dow Jones Industrial Average surpassed 40,000 points for the first time in history, marking a significant milestone. Additionally, all major indices experienced a healthy consolidation day, digesting some of the recent rally that has propelled the leading growth names to finally break above their multi-month consolidations.

We are seeing a bullish sentiment from analysts worldwide, and market participation is increasing. The breadth of stocks breaking higher and starting to reclaim or extend above their rising daily 10 and 20-day EMAs is growing healthily, which is characteristic of a bull market.

Regarding tangible analysis of yesterday’s trading session, things were not particularly exciting. There were no significant breakouts to review, as the majority of A+ trades have either already broken higher in their first leg or are edging closer to their volatility contraction pattern (VCP) breaks.

Earlier on Thursday, three Federal Reserve officials—Cleveland Fed President Loretta Mester, New York Fed President John Williams, and Richmond Fed President Thomas Barkin—cautioned that interest rates might remain elevated for an extended period while speaking at separate events. This commentary seemed to dampen the momentum of the recent stock market rally.

At an event in Wooster, Ohio, Mester explained, "Maintaining our restrictive stance for a longer period is prudent at this point as we gain clarity about the path of inflation."

This was comfortably accepted by the market and is not a cause for concern. In fact, the market had already priced this in, as the March sell-off was mostly attributed to investors overestimating the progress in tackling inflation.

Nasdaq

The QQQ appears to be slightly extended above its point of control (POC), which is at $440, with an extension of almost 3%. This doesn't necessarily indicate that the Nasdaq is likely to experience a sharp decline. Instead, it suggests that we may see some sideways consolidation, allowing the rising 10-day EMA to catch up. This is based on the assumption that we will start to see more profit-taking and increased transactions at these new highs.

We would not be surprised to see the QQQ finish in the red today, coming down to $447 to fill the large supply/demand gap that starts at $451. That said, it is also possible to see buyers aggressively step in once again, as they have in recent weeks, to drive prices even higher, especially with the high number of setups that are likely to start being accumulated.

S&P Midcap 400

The midcaps indeed demonstrated the extension in price we discussed more clearly, with yesterday’s session resulting in a break below Wednesday’s lows. The MDY is currently seeking demand to support its descent. According to the visible range volume profile (VRVP), the next robust level of support is expected between $550 and $548, likely the direction in which the price will head.

We anticipate further consolidation and profit-taking at these levels in the immediate short term, while the EMAs catch up and buyers resume stepping in to drive prices higher. It's worth noting the lower volume on this relatively "large" red day compared to recent sessions. This is actually quite a bullish indication, suggesting that the majority of buyers are holding onto their shares rather than aggressively selling, which would have indicated low trust in the rally. It wouldn't take a large shift in buyer aggression to override this decline.

Russell 2000

The small caps encountered a significant supply zone around $208.50, resulting in substantial profit-taking. On the visible range volume profile (VRVP), the orange volume represents selling volume, while the blue volume indicates buying. It's evident from the histogram that buyers were hesitant to intervene and halt the decline.

The likely next stop for the IWM is around $207, coinciding with both the rising 10-EMA and the highest volume cluster, which should act as a zone of demand.

Volume, similar to the MDY, was low, indicating that the majority of buyers are accumulating shares rather than distributing them. This suggests that prices will likely continue to rise over the coming sessions as more stocks set up and attract buyer attention.

DAILY FOCUS
Money Is Made By Waiting

The market is currently in a favorable position. By now, you should have taken long positions in stocks like SMCI and MSTR, which are showing constructive behavior. If you missed those opportunities, first, ask yourself why to prevent it from happening again, but then exercise patience. We anticipate a flood of opportunities in the coming sessions as smaller, more speculative names also begin to break higher, following the lead of more established names reaching new highs.

Avoid overtrading and resist the urge to chase after stocks now. Instead, remain patient and observe which stocks are setting up and appearing the most promising. This approach will enable you to enter low-risk positions once they start moving higher.

Preparation + Patience = Opportunity

Your role as a trader is 90% waiting and analyzing. We earn our profits by making sound decisions, not by mindlessly clicking buttons to buy or sell every day. As professionals, we adhere to a strategy that we have strong conviction in. Use this time to hone your skills and be at the top of your game.

It only takes one bull market to achieve life-changing wealth. We are currently in such a bull market.

How will you rise to the occasion?

WATCHLIST
The Ones To Watch

ROOT: Root, Inc

• One of the most explosive stocks in the market, ROOT, is forming an incredibly tight range above its daily 50-EMA and is currently riding both its 10 and 20-EMAs.

• Demand kicked in yesterday at the rising support line, which has been respected since mid-April, and the stock appears ready to make a move today.

• We will be looking to aggressively enter a long position at a break above $63.15 today, contingent upon the market climate accommodating this move.

GCT: GigaCloud Technology Inc

• GCT continues its Volatility Contraction Pattern (VCP) following strong earnings last week and is currently testing a resistance line that dates back two months.

• Considering GCT's strong performance in the previous bull run, along with its substantial base and robust revenue and earnings growth, this stock is generating significant excitement.

• Today, we will be seeking a long position on GCT, contingent upon a valid break above $36.65.